Question

1. Which of the following statements about takeovers is false?a. Mergers create a new firm, while acquisitions do not.b. Both mergers and acquisitions require two-thirds votes from both firms.c. In the tender offer, the acquiring firm makes a public offer to purchase shares of the target firm.d. Acquisition of assets is one of the types of takeover.

2. Which of the following firm structures is least likely to be the target for a bidder?a. Common shares are widely held.b. The stock is undervalued.c. It has a simple corporate structure.d. There are many legal problems.

4. Which of the following statements about hostile takeovers is false?a. In hostile takeover bids, there is usually a tender offer.b. A formal vote by the target shareholders is required.c. The target has no desire to be acquired.d. The target actively rebuffs the acquiring firm and refuses to provide any confidential information.

5. Which of the following statements is false when the market price immediately jumps above the tender offer price in a hostile bid?a. A competing offer is likely.b. The bid is too low.c. The bidder will have to increase the offer price.d. The bid is too high.

6. Which of the following statements is false regarding a tender offer during hostile takeovers?a. If there is little trading, this is usually a bad sign for the acquiring firm, since shareholders are sitting on the shares and are reluctant to sell.b. A large amount of trading indicates that shares are cycling from regular investors into specialist hands.c. Arbitrageurs are only interested in selling as long as the price is right.d. The motivation of arbitrageurs is to take control of the target.

7. Which of the following is not a defensive tactic in a hostile takeover?a. A shareholder rights plan (a poison pill)b. Selling the crown jewelsc. Finding a white knightd. Cooperating with the acquirer